Butcher Shop Business Plan Butcher Shop Business PlanMeat is the staple of almost everyone’s diet. To keep it healthy and nutritious, people expect the animals to be “free range” and not tainted by chemicals before reaching the dinner table. There is understandably a lot of social concern to make sure the meat industry is not crueler than it needs to be. Where can people trust the meat they eat?
Parkdale Meats is a specialty butcher shop which seeks to serve the highest quality meat cut to customer specifications, as well as become the foremost specialty meats provider in the greater Parkdale area.
The meat and poultry industry is the largest segment of U.S. agriculture; its total production surpassed 91 billion pounds in 2007. U.S. meat consumption was 55% red meat (beef, veal, lamb, pork, and mutton), 36.8% poultry, and 8.2% fish that year. Meat is sold through retail establishments, including restaurants, grocery stores, and butcher shops. Independent butcher shops have decreased in number over the last ten years as sales of meat have slightly fallen and moved to grocery stores and big box retailers. However, this creates an opportunity for specialty butcher shops in markets which only provide basic meat options from larger retailers.
Competitors for Parkdale Meats fall into the following categories:
• Grocery Stores: seven stores in the greater Parkdale area
• Big box retailers: Walmart and Costco
• Butcher shops: Red’s Meats and Bay Avenue Butchers
Parkdale Meats will establish its competitive edge through the expertise of its founders, Robert Suidae and Eryka Auroch. Robert brings with him existing relationships with the best meat suppliers, as well as an understanding of the craft of butchering. Eryka provides understanding of food service management, sales record in business-to-business sales, and financial acumen. Together, the pair will have an edge over the town’s other butcher shops and grocery stores in its niche market.
Parkdale Meats is a specialty butcher shop which seeks to serve the highest quality meats cut to customer specifications, as well as become the foremost specialty meats provider in the greater Parkdale area.
The business will grow from its own cash flow post-startup. There is room for significant growth in the initial target markets before the shop needs to take on additional staff or move to a larger facility.
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Each of the two founders, Robert Suidae and Eryka Auroch, are investing $65,000 of their own money for a total of $130,000 in initial investment.
Meat is the staple of almost everyone’s diet. To keep it healthy and nutritious, people expect the animals to be “free range” and not tainted by chemicals before reaching the dinner table. There is understandably a lot of social concern to make sure the meat industry is not crueler than it needs to be. Where can people trust the meat they eat?
Parkdale Meats will sell aged beef, free-range poultry, fresh pork and domestic lamb. Upon request, the store will sell wild game such as buffalo, alligator, kangaroo, quail, and other specialty meats. The products will be purchased from suppliers within a 100-mile radius of the store to minimally impact the environment and maintain product freshness. The shop will purchase whole animals, and trained butchers will butcher them once they arrive. To ensure all customers leave satisfied, the sales staff will help make special orders if the shop doesn’t have a specific meat in stock, as well as offer suggestions when no special order is possible.
The American Meat Institute provides the following analysis:
"The meat industry is unique because it relies on live animals as its raw materials. Within livestock production, there is a classic, livestock price cycle. Prices rise and fall as producers raise more animals in response to high prices or low supply, and then cease producing when livestock inventories become high and prices fall. At the low points in the livestock price cycle, some livestock producers have called for reviews of meat packing industry structure to determine if the structure may be causing a price decline. Each review has found that industry structure is not to blame for livestock prices. Rather, the basic laws of supply and demand most often are the cause."
Elsewhere, researchers have found a wave of consolidation occurring in the meat industry since the 1990s, spurred by the growth of several major grocery chains like Walmart.
"Consumers are eagerly buying more conveniently prepared food products of consistent quality, despite the sluggish growth of overall food spending," write researchers Barkema, Drabenstott and Novack. "…nearly 40 percent of the consumer’s food dollar is spent in restaurants and other eating establishments."
Despite, and in fact because of, these changes, there is a growing need for sales of specialty meats to the niche market who can afford them and desire them as they are no longer satisfied by grocery stores and large retailers.
Potential customers in Parkdale are divided into the following groups in the market analysis table:
Parkdale High-Income Households: Annual household income of over $100,000 in Parkdale (80% of which consist of two adults).
Parkdale Medium-Income Households: Annual household income of $50,000 to $100,000 in Parkdale (50% of which consist of two adults and 50% of which consist of one adult).
Neighboring Town High-Income Households: Annual household income of over $100,000 in the five towns bordering Parkdale (80% of which consist of two adults).
Caterers: Upscale catering businesses in a 15-mile radius of Parkdale.
Restaurants: Upscale restaurants in a 15-mile radius of Parkdale.
Target Market Segment Strategy
Market segmentation for Parkdale Meats is based on the specific market opportunity in the Parkdale area. While low-income households are content with purchasing the meat options at local grocery stores and big box retailers, households with more disposable income are interested in expanding their options for home-cooked meats. Furthermore, these customers host events in their homes more frequently than low-income households do and prefer to offer high-quality or rarer meat options to their guests.
Of the potential customers in neighboring towns, high-income households will be targeted first. They have the disposable income to comfortably handle the time and gas expense of a trip and will therefore be more likely to travel to Parkdale.
Upscale restaurants and caterers, especially those serving high-end corporate and private events, seek high-quality, specialty meats at wholesale prices. Parkdale Meats will sell in bulk to them at a substantial discount from retail prices, but still enough to generate a profit. Restaurants and caterers will be required to order in advance to allow for specialty orders, as well as to not deplete the meat available at the retail location for immediate purchase.
Competitors for Parkdale Meats fall into the following categories:
• Grocery Stores: seven stores in the greater Parkdale area
• Big box retailers: Walmart and Costco
• Butcher shops: Red’s Meats and Bay Avenue Butchers
Grocery stores provide basic meat options at relatively low prices. They are chosen by customers interested in buying meat along with all of their other grocery needs and not traveling far from home. These customers will sacrifice quality and available options for price and convenience.
Big box retailers serve clients who are interested in the lowest price and willing to sacrifice convenience (longer waits and longer travel times). They offer the same quality and variety of options as grocery stores.
Red’s Meats has been in existence for 25 years and primarily serves customers who value the store’s history. These customers have typically been buying meat at Red’s for at least five years and live within five miles of the store. Because its meats are only slightly higher quality than grocery stores, Red’s does not serve caterers and restaurants. Instead, it sells primarily to medium-income households.
Bay Avenue Butchers was established 10 years ago and solely focuses on high-quality red meat. They sell red meat to caterers and restaurants, but these businesses likely consider using a different vendor that can provide a wider range of options. Bay Avenue Butchers has high prices for its retail products and mainly serves high-income households.
Some restaurants are indirect competitors as consumers interested in specialty meats may choose to eat out instead of cook the meal themselves.
Parkdale Meats will establish its competitive edge through the expertise and experience of its founders. Robert Suidae has existing relationships with the best meat suppliers and an understanding of the craft of butchering. He has trained a number of assistant butchers who went on to take head positions at grocery stores and butcher shops. Coupled with Eryka Auroch’s understanding of food service management, sales record in business-to-business sales, and financial acumen, the pair will have an edge over the town’s other butcher shops and grocery stores within its niche market.
Parkdale Meats must follow these principles in order to achieve success in its market:
1. Maintain high-quality standards for its suppliers and continuously monitor this quality.
2. Preserve meats in optimal conditions to maintain freshness while in the store.
3. Practice excellence in the skill of butchering meats through hiring, training, and supervising staff.
4. Listen carefully to customer needs and respond with custom-cut products, whether in person, over the phone, or through Internet orders.
The marketing strategy of Parkdale Meats is to establish anticipation of the store’s opening in the community so that it can hit the ground running with retail sales immediately upon launch. To that end, the following tactics will be used:
• Facebook company page with targeted ads and a stream of posts emphasizing health, natural and organic meats, cooking, recipes, and community.
• Twitter company account also with a stream emphasizing health, natural and organic, cooking, recipes, and community.
• Instagram company account showing pictures of meat dishes, recipes, barbecues, and more.
• Direct mail of flyers to a select list of 5,000 high-income households.
• Advertisements in local newspapers and magazines.
• Flyers in the downtown area around the site of the store.
• Launch of the website in anticipation of opening.
• Yellow Pages listing.
Parkdale Meats will join the local Chamber of Commerce and Food Provider organizations for networking and marketing opportunities with other businesses.
After opening, the following tactics will be used going forward:
• Consistent social media streams on Facebook, Twitter and Instagram.
• Direct mail to additional households with higher incomes.
• Search engine marketing via local Google ads.
• Email newsletter describing developments in the specialty meat industry to business customers and certain households.
There are sales strategies for both retail and business sales.
Retail sales will be based on the marketing of the store and its location, explained in the marketing plan section. At an operational level, orders will be taken in person by clerks working the floor of the store (two on duty at any given time), or by the office clerk over the phone or Internet. Orders for specific cuts will be transmitted from these clerks to the butchers on duty, who will prepare the cuts. The floor clerks will package, price and prepare the cut meats for sale.
Walk-in customers will be greeted with a standard greeting and served to meet their satisfaction with quick order-turnaround as well as high quality meat cuts. A machine will give numbers to waiting customers so they can be served in an orderly fashion. These customers will have a few seats in the store to sit in while waiting.
The business sales strategy relies on prospecting by Eryka to establish connections with caterers and restaurants. She will research, contact, and present to these businesses using her past sales experience. As a partner of the business, she will work to maximize revenue and increase profits instead of being motivated by commissions on sales.
Parkdale Meats will provide the following products on a regular basis:
